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The Tiff over Tariffs

To tariff or not to tariff.  How much and applied to whom is the question.  Simply put, via Investopedia,” tariffs are used to restrict imports by increasing the price of goods and services purchased from overseas and making them less attractive to consumers.”

While its intent is to protect domestic businesses by placing globally sourced imports at a disadvantage through higher prices, it may wreak havoc with your supply chain.

First, a bit of history.

Until the passage of the 16th amendment in the United States, which gave the power of the government to collect taxes, tariffs, were predominantly the sole source of revenue for the U.S. Government. Not surprisingly, the Tariff Act of 1789 was the first official act passed by the newly formed US Congress to thwart dependence on cheaper goods from overseas as well as promoting industry in the new nation.

The accompanying infopic gives a concise summary of U.S. tariffs, tariffwith expanded history and details explained here.

To be sure, the United States does not claim to be the architect of tariff imposition. Several sources indicate the word tariff originated in the small Spanish coastal town, Tarifa, where the port “levied fees” for use of its docks.  Tariffs, which may also be synonymous with customs duties, were imposed by Ancient Egyptians at various cross points, as well as by the Ancient Greeks who charged fees for goods traveling in or out of state.

Tariffs and the Supply Chain

By nature, supply chains are global. Combined with international trade protection methods, supply chain sourcing decisions are deeply affected by tariffs… and may often create political chaos (trade wars) as well as financial mayhem. In fact, tariffs often represent the greatest obstacle to foreign trade. Along with government regulations, quotas and customs, tariffs pose among the highest forms of external environmental risk to supply chains. As the landed cost, the cost of an item plus its associated tariffs, taxes, transportation costs etc., of goods increase, the greater the impact is to the bottom line.  The low cost of goods yielded from years of nurturing supplier relationships and diligent contract negotiations with trusted suppliers are immensely diminished with the onset of unexpected tariff imposition.

Multiple goods, crossing multiple borders, each with their own tariff, significantly add to the final cost of the finished product by the time it reaches the customer downstream.

In recent news, the impact of reciprocal tariff burden is being felt by Wisconsin based motorcycle manufacturer, Harley-Davidson.  This iconic American brand – as of this writing- is likely to move the Kansas City production of its European bound goods to Europe. In response to the tariffs charged by the U.S. on imported steel and aluminum, the EU will be charging a retaliatory tariff of 31%, thereby increasing the cost of a motorcycle by ~$2,200 if manufactured in the U. S. and exported to the EU.

With the trade tiff likely to continue, supply chains can take proactive steps. According to Supply Chain Drive, a good strategy would be using technology to conduct costing scenario simulations to prepare for the worst. Opening communication channels is recommended as well.

If, like most businesses you anticipate further disruptions due to trade battles and tariffs, more tips on preparing can be found here.

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Repercussions

Ah, repercussions! If, like most proficient smartphone users, you have a plethora of mobile apps that facilitate your banking, communication, travel, and shopping needs you have undoubtedly been swamped with prompts to accept new privacy policies from your apps.

Who to thank?

The EU, actually.   Prior to the Facebook debacle, when news outlets exposed the misuse of personal data culled from the social media giant’s site, privacy policies prevailed… to an extent. But once the user data ended up in the hands of the political consultancy firm Cambridge Analytica, adherence to the rules of the game changed.

The General Data Protection Regulation (GDPR), a European Union legal framework adopted well before the Facebook data breach, established guidelines for the collection and processing of personal data and privacy of EU citizens. The very recently updated GDPR replaced an obsolete data protection “directive” created way back in 1995. The Facebook breach led to further evolution; a mandate was issued requiring full implementation with stricter rules, and took effect on May 25th2018.

The additional regulations put consumers back in control of their personal information. Who could have thought a small business owner in Poland – or even the United States – would have their business seriously impacted by legislation revised in Belgium?

While following the new regulation is obligatory in the EU, repercussions are worldwide. The rigorous rules have multinational companies scrambling to ensure system compliance less they lose their customers across Europe. If you’re wondering what has a non-EU based company is scrambling, simply refer to Article 3 of the GDPR.  As Forbes plainly interprets, under the “territorial scope” clause of Article 3, “if you collect personal data or behavioral information from someone inan EU country, your company is subject to the requirements of the GDPR.”

The good news? The law only applies to companies if the consumer is in the EUwhen the data is gathered. An EU citizen whose data is collected while outside the EU is not protected under the GDPR.

A collaborative effort among several European nations, likely led by Germany where data privacy is held in especially high regard, the GDPR is composed of several key components allowing consumers to control their data. For example, at some point we’ve all “unchecked” the opt-in box to receive marketing material/ data sharing upon registering at a new website. Under the expanded GDPR, the opt-in boxes will no longer be pre-checked. Agreement now requires a positive opt-in.

Full details on user protection and privacy, as well as compliance tips, can be found here.

Not surprisingly, backlash and controversy prevails. Some feel innovation would be stifled through the lack of data access used for artificial intelligence and machine learning. Furthermore, law enforcement may be hampered by a lack of data sharing.  A recent piece in the Wall Street Journal refers to the GDPR as, ”The EU’s Gift to Cybercriminals,” since police little or no access to vital crime solving data.

Either way, considering the implications – and hefty penalties- for non-compliance it looks like company data security officers will certainly have their hands full.


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BIG DATA: Friend or Foe

Big Data has been getting ample attention lately, not necessarily all good.  Just last month I penned a piece on internet misconduct, using the recent Facebook misuse of user data, as an example. Not coincidentally, a spate of articles and opinions has ensued questioning the real value all this data provides to mankind.

How popular is Big Data?

Popular enough to have dedicated events attracting techies. New York City has been the location of a Big Data event hosted by the venture capital firm FirstMark. Entitled Data Driven NYC, the meet-up has been run monthly for several years by a group of tech aficionados who offer varying topics associated with the data revolution.

And if monthly meet-ups in major metropolitan areas don’t sufficiently reflect the popularity and proliferation of data, data growth by UNhow about the information in the accompanying graph from the United Nations Economic Commission for Europe (UNIECE)?

The seismic growth represented in the UN’s graph not only demonstrates global data creation over the last 10 years, but begs consideration regarding the bandwidth and networks required to process and analyze all this data.

Before reviewing the potential dangers and/or controversy surrounding Big Data, let’s delve into the social good, rather than business benefits, that data can deliver. To be sure, there is a tremendous upside in exploiting data for positive, common good.

 

SAS, whose tagline is to transform a world of data into a world of intelligence, is a software company specializing in data analytics and business intelligence. Their suite of applications includes Data for Good projects.

After a 7.8 magnitude earthquake struck Nepal in 2015, over forty-thousand people were left homeless. Upon analyzing over 300 million rows of trade data, including information such as production capacity, labor migration and technical specifications, SAS was able to swiftly identify and source the sheet metal required to build new homes for the displaced.

Similarly, in medicine, robust data analysis is used to swiftly decipher complete strings of DNA to discover new cures for existing illnesses as well as identify emerging disease patterns. According to open.edu, this “increase in the amount and accessibility of ‘big data’ allows for the analysis of genetic material from entire populations.”

Bloomberg Philanthropies drives a program called The Bloomberg Data for Good Exchange which advocates for accelerating data science for positive social outcomes. For example, data scientist Natalia Adler partnered with Bloomberg to help children worldwide. Using Bloomberg data, they identify companies around with child labor policies. Going forward, they plan to implement network analysis to determine if these companies could influence the adoption of child labor policies across their entire supply chain.

Naysayers?

Recently, the book The Efficiency Paradox, presciently written by Edward Tenner before the Facebook scandal, explores the unintended consequences of technology and analyzing data. According to the Wall Street Journal book reviewer, the author explains how efficiency created by technology and data erodes the human skill set and potentially contributes to greater inequality in the workplace.

Gregg Easterbrook, the reviewer himself, ponders, “In the future, will Big Data help physicians cure diseases or help health insurers deny claims? Make factories and products safer or accelerate layoffs? Ultimately spawn some kind of hostile artificial intelligence?”

It should be interesting to see how the use and misuse of data plays out, especially with such renewed government focus. After all, while Facebook’s stock may have temporarily tanked after the scandal broke, the stock is making a healthy recovery as of this writing.


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Bad Behavior

Once upon a time, the chances of a business or consumer being fleeced, financially, were smaller than in today’s hi-tech environment.  To be sure, bad actors have been plundering, thieving and murdering for centuries. (As an interesting –and historical- aside, an article in the Los Angeles Times details quite the whodunit claiming that a 430,000-year-old skull suggests murder is an ‘ancient human behavior’).

But murder is not the bad human behavior to which we are referring today.

Globally, an egregiously unwanted byproduct of the Internet of Things is cybercrime. Simply defined as a crime involving a computer and a network, cybercrime takes on many forms… fraud, email phishing, identity theft, piracy, and hacking to name just a few.  In the deep web, where users are anonymous, malicious intent is even higher. With millions of interconnected devices worldwide, the escalation of abuse has risen enormously.

The accompanying graphic cleverly Data breachillustrates the cloud’s unintended role in potential cybercrime exposure.

In a 2017 TechRepublic interview with IBM’s executive security advisor Etay Maor, Maor explains the difficulty cybersecurity faces in keeping up with cybercrime, further suggesting that new technology puts companies at even greater risk.

 

Who is vulnerable?

Everyone.

Misconduct on the internet can be pervasive across many industries. MarketWatch published this chartdata breach by entity with alarming information compiled by Jefferies, a global investment firm and the non-profit Identity Theft Resource Center.

Their analysis reveals that, “data breaches at U.S. businesses, government agencies, and other organizations topped 1,300 last year, versus fewer than 200 in 2005.”

Could data breaches be the foulest of offenses committed against a business? Perhaps.

In the 21st century of big data and data analytics an enterprise’s most prized possession just might be their data. Valuable business intelligence is the result of information gleaned from effectively processing data from customers, suppliers, competitors and the global marketplace. Companies are vulnerable not only to data breach, but breaches of trust.

Just ask Facebook.

Their stock plunged almost twenty percent over the course of 10 days once news broke that data from tens of millions of users ended up in the hands of political consultancy firm, Cambridge Analytica. Many users subsequently deactivated or deleted their Facebook accounts while many corporations companies suspended their advertisements on the social media platform. Although certainly not purposely perpetrated by Facebook CEO Mark Zuckerberg, who has since apologized, this scandal highlights how critical it is for companies to be forthcoming and transparent about the use –or misuse- of data. Not to mention implementing exceptional data protection and security.

Many companies offer cybersecurity services and numerous publications weigh in on security techniques. For those looking for a starter list, here goes:

Small Business Trends posted a brief list of 5 Ways Big Corporations Protect Their Data That Small Businesses Should Copy, here; NASDAQ suggests 5 Ways Small Business Owners Can Protect Data, here; and Forbes outlines key steps in How To Protect Your Business From A Data Breach: Seven Key Steps, here.

 


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Remember the Internet… and Lipstick?

The longing for simpler days. Nostalgia. You can’t go home again.

You get the point.

It wasn’t that long ago – perhaps the 1980’s – when billions of people had no exposure to the internet.  Now, according to Internet World Stats, a top provider of current world internet usage, over 4 billion users had tapped into the internet by year end 2017.

total unternet infoWhile over 2 billion of these surfers are located in Asia, the continent of North America boasts the greatest penetration rate, a marketing parameter that indicates the adoption or usage rate.  In North America, the internet adoption rate leads worldwide at 95%.

But we digress.

As connected, innovative devices – and their swift adoption – have expanded exponentially, the idea of simply cruising the internet for information and email with a stand-alone computer seems rudimentary and dated. More recently, people and businesses- and their “smart” devices – have succumbed to vigorously engaging with the Internet of Things (IOT). The wireless virtual assistant at home (Cortana or Siri), the Fitbit that uploads and synchs daily fitness data with smartphones, or the smart thermostat allowing consumers to control the climate in their home remotely are mere samplings of the networked players in the IoT.

A widely used expression to define “the interconnection via the Internet of computing devices embedded in everyday objects, enabling them to send and receive data,” the IoT was first coined by Britain’s Kevin Ashton, widely considered the father of IoT. Ironically, the term was first presented at a meeting in a relatively low-tech presentation tool – PowerPoint.

In 1999, Ashton was a brand manager at Proctor and Gamble and working on a lipstick launch.  Noticing the shelves were often empty of one particular shade of P&G’s new product, he sought to develop a way to remotely track the quantity of lipstick on display. Excited about the idea of using a radio enabled chip known as RFID (radio-frequency identification) to electronically – and instantly – transmit supply chain data, Ashton was determined to share the concept with his colleagues.

Hence, he created the PowerPoint presentation entitled “the Internet of Things”.

Fast forward to 2018 where the IoT is arguably standard procedure… especially in supply chains.  The IoT delivers numerous efficiencies via asset tracking, supplier relations and inventory forecasting.  The collection and visibility of supply chain data via the IoT not only optimizes the supply chain, it is a key element in improving the customer experience. In fact, the significance of IoT in supply chains has gained such traction that Rutgers University has launched an educational program that specifically explores and explains the impact of the Internet of Things (IoT) on the next generation of supply chain strategy.

At SDI, the efficiency and effectiveness of our supply chain offerings are dependent on our innovative processes and their underlying technology.  Information on how you can leverage our expertise – using the IoT – can be found here.


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The Evolving Dynamics of Hiring Practices

According to Wiktionary, a well-oiled machine is something that operates capably through the effective coordination of many parts. Macmillan Dictionary, a recognized international publisher of encyclopedias, takes it a step further by defining it as a well-oiled system, project, or company that operates without problems.

In any case, these systems or machines rely on a stable, highly functional foundation – employees.  Employees, equipped with the right skill set, are the keepers of the efficiently running enterprise.

But, hold on.

With the onset of the “gig economy,” in which freelancers and contingent labor (AKA complimentary workforce or independent contractors) make up an increasing portion of a company’s resource pool, the dynamics behind hiring have changed radically.   The erosion in the “lifetime career” employment model has been arguably displaced by the Managed Services Provider (MSP) model, whereby a third-party vendor/company handles primary responsibility for managing an enterprise’s independent contractors.

These on-demand employment opportunities have grown significantly, particularly in this century. According to a recent study by Intuit, the financial software company, by the year 2020 43 percent of the United States workforce will be contingent labor. intuit_qb_social_charts_0815 The accompanying chart illustrates the rapid growth in this labor type in the U.S. from 1989 to Intuit’s 2020 forecast.

Quality of work

As businesses increasingly rely on the use of contracted labor to ensure their enterprise indeed remains well-oiled, the vetting process for resources is crucial. Since rapidly and effectively managing global resources can be challenging, cumbersome and costly for any business, the delivery and support of qualified resources are increasingly handled by reputable MSPs with years of experience.  These MSPs are committed to attracting and retaining highly specialized global professional resources to swiftly engage, deploy and deliver value.

While the basic responsibilities of an MSP may include general program management, supplier selection and management, reporting and tracking, among the most critical responsibilities is to ensure contractor compliance. Simply put, companies must adhere to federal regulations which determine whether to classify a hired resource as an employee of the company or an Independent Contractor.  Since one of the principal risks in employing independent talent is misclassifying employees as independent contractors, due diligence in vetting is essential.

SDI has deep expertise in small supplier spend and has been managing small suppliers on behalf of Fortune 500 companies since 1992. vetted ICs SDI’s continually evolving best practices program results in the provision of vetted, experienced, and trusted resources to business enterprises.   Our contractor compliance program guarantees 100 percent adherence to federal law.

More information on how we can be of help staffing your organization can be found here.


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Supply Chain Gifts of 2018

Everybody loves numbers. Not necessarily numbers in the arithmetic, trigonometric or algebraic sense. Rather, the simple use of numbers in headlines is apparently an effective trigger to draw readers into perusing content organized numerically. And content that might be useful as well.

So, in the spirit of songs such as The 12 days of Christmas and The 8 Days of Hanukkah, we’d like to share what we believe will be among the best supply chain practices and considerations for 2018.  While we have no intention in sharing it in musical format, we’ll simply refer to it as 5 Supply Chain Gifts for 2018 – in no particular order.

  1. Cybersecurity – Considering the volumes of data shared and transmitted among suppliers, business partners and other third parties, data breaches are a risk if all engaged parties are not maintaining standards of security compliance. As the Digital Guardian suggests, “The supply chain as a whole is only truly secure when all entities throughout the supply chain carry out effective, coordinated security measures to ensure the integrity of supply chain data, the safety of goods, and the security of the global economy.”
  1. Blockchain – On the topic of security, block chain is the incorruptible digital ledger used to accurately and securely record transactions among participants. This technology gained familiarity and recognition as the platform that records cryptocurrency transactions, but has subsequently seen additional use to prevent voter fraud and improve government efficiency. IBM has implemented blockchain in their supply chain network and has yielded results such as improved inventory management, fraud reduction and elimination, and increased customer/partner trust.
  1. Artificial Intelligence – Intelligent machines learning and adapting from human experiences and other interactions.  Earlier this year the Wall Street Journal published a piece declaring, “Artificial intelligence is shaping up as the next industrial revolution.” AI is the force behind voice-powered personal assistants, virtual reality, military mission management and more. American Express purports AI has a role in Global Supply Chain Management Planning. It can leverage information from sources as varied as historical data, social media and weather forecasts and, “AI-based machine learns to automatically analyze vast amounts of supply-chain management data, identify trends, and generate predictive analytics — the ability to predict problems and outcomes.” A supply chain manager’s dream.
  1. Data Analytics – No longer in its infancy, data analytics has long been an imperative for organizations ranging from baseball teams to chess leagues. Used for years in SCM, it is constantly evolving. Just ask IBM. By parsing out the types of analytics, e.g., predictive and prescriptive, and their respective usefulness, e.g., what might happen and what shall we do about it, IBM demonstrates how big data can be used to answer the toughest business questions. More here on their other types of analytics.
  2. People – Talented, skilled and dedicated resources are the foundation and support of innumerable organizations. Whether executing day-to-day processes or applying innovative applications to emerging technologies, people provide the vision and creativity to run a well-oiled, high functioning organization.

    The human component, for 2018, just might be your most important business asset.